Non Conforming Loan:
Non Conforming Loans have been designed for borrowers that have had some difficulty in maintaining a good credit history in the past. Such borrowers might experience difficulty in obtaining a home loan with a main stream bank.
In addition to poor credit history a bank also looks at borrowers that may be self employed and not able to show adequate and consistent income or adequate documentation as a credit risk. Other banks will consider a poor employment history as a high credit risk and may not approve an application for a loan.
There are certain lenders that will lend to such borrowers. The Non Conforming Loans have higher establishment fees and are also usually charged at a higher interest rate.
Non Conforming Lenders have different lending criteria than main stream banks.